Case Study: When Should This Divorced Widow Claim Social Security?
A slightly superior approach would involve Brenda first filing at age 60 in May 2024 for a reduced survivor benefit, which would pay $1,349 per month, and then filing for her own reduced worker benefits of $1,851 at age 62. The result of this approach would be $596,429 in projected lifetime benefits.
A bigger jump in projected income comes from assuming Brenda can drawn on other income sources and delay claiming her own worker benefit until May 2031, when she would be age 67 and be entitled to her full primary insurance amount of $2,630. This would deliver some $644,350 in projected lifetime benefits.
An even more powerful approach would be to see Brenda wait to file for her full survivor benefit of $1,888 at age 67 in January 2031. She could then wait until May 2034 to file for her delayed worker benefits at age 70, at which time she would get 124% of her primary insurance amount, or $3,261. This strategy would deliver some $749,517 in projected lifetime benefits.
A similar benefit amount of $757,666 is projected were Brenda to file in May 2024 for reduced survivor benefits ($1,349) at age 60 and then file in May 2031 for her worker benefits ($2,630) at age 67. But there is one strategy that delivers almost $100,000 more than even this approach.
The best approach considered would be for Brenda to file in May 2024 for reduced survivor benefits ($1,349) at age 60, and then to file in May 2034 for her delayed worker benefits ($3,261) at age 70. This would deliver an impressive projected lifetime benefit of $843,429 — a whopping $270,000 increase in projected benefits.
The Bottom Line
As Kiner and Blair emphasize, the purpose of the case study is to show just how much variability in expected lifetime benefits there is across the different claiming strategies, and it’s not always going to be beneficial to follow the “virtuous” rules of thumb that financial planners often speak about, such as delaying claiming as long as possible in all cases.
As the last example shows, in more complex cases it may be a mix of early claiming and delayed claiming that ultimately results in the best lifetime payout. Additionally, it won’t always be possible for an individual in the real world to follow the absolute optimum strategy, though it’s certainly worth defining what that strategy may be.
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Learn more with ALM’s “2024 Social Security & Medicare Facts.”